Saturday, August 6, 2011

I have to admit that it is easier grumbling about a discipline you don't understand than defending the one you do. I hope that our economic discussions here don't look to economists the way Watts Up does to climatologists, and I would really welcome participation by mainstream economists, even to the point of shooting down most of what most of us say, if they had the patience to explain themselves.

Now, Watts, on the other hand, actually tends to remove the most effective counterarguments from his stream. And Liljegren, though scrupulous about including them, eventually decides that one is among those to whom one should be consistently rude and dismissive, thereby discouraging participation. At McIntyre's, that's left to the fans.

So I am left following the skeptics at Curry's and Kloor's. Although much of what they say and do strikes me as strange, they do create an environment where participation by someone like myself is not harshly punished.

I am concerned that, as an economics skeptic, I not end up acting as an economics denialist. I encourage readers to be as polite to newcomers to the conversation as they would be to a human being entering a room, because that is, after all, what is happening. Cogent opposition is the most valuable commodity around.

Of course, the trouble is that non-cogent opposition is much easier to come by, and occasionally hard to get rid of. But being explicitly rude and hostile even to positions you feel have no merit creates an environment where ideas don't get adequately challenged. Saying what you think is not enough. It's best to say what you think and then turn around and doubt it as effectively as you can - to be your own skeptic.

To the extent that we (the numerate climate blog community) meander into territory in which we have little experience, it's possible that we get things badly wrong. We should welcome attempts at correction from people who are steeped in these matters. In politics, it's best to ignore or deflect effective challenges. In science, it's best to welcome them. Above all, the principle this site espouses is that there is a need to bring the scientific culture into policy. I think we should be kind to each other as people and as hard on our own ideas as on each other's.

33 comments:

In the sense you mean it, MT, I too am now an economics skeptic basically for the reasons yu have mentioned: not based on physics. However, it begins well and I see little actually misleading in Paul Samuelson's textbookhttp://en.wikipedia.org/wiki/Economics_%28textbook%29at least in the edition(s) that Samuelson himself wrote.

There are some simple principles which appear to be based on actual behavior together with an overly simplfied assumption of people as (sociopathic) rational agents, risk neutral. This is clearly an approximation, but so is Newton's law of gravity; both work in nonextreme cases.

It is the monetarists (Milton Friedmanites and the Austrian school) which become carried away with the abstractions, failing to test what they posit against what has actually happened.

A better economic science would recognize that most are risk adverse with a few being rick seekers and even fewer being actually neutral. Nor are people selfishly rational decision agents as even actual sociopaths lack that degree of rationality. Unfortunately, taking all this into account appears to me, at least, to be beyond current ability, being genuinely difficult.

First there is the economic assumption the people are rational actors. However, people are not rational about anything to do with money or risk.

Americans no longer seem to have the skills to do interest and rate of return problems. If they are not doing the math, then they cannot even calculate the rational choice, even it they were trying to make a rational decision.

That is, traditional assumptions about economic actors are not applicable in the USA today.

I am sorry, but there is a lot of useless junk and bad assumptions in economics. On the other hand, give the recent acknowledgement of carbon (as CH4!) releases from the permafrost in the Arctic, any climate model that does not fully address carbon feedback and ice dynamics is pretty much junk. From this inadequate sample, I conclude that it is in our nature for each and every one of our sciences to contain a good bit of junk.

I am to the point where I think that any document that really tries to say something very substantive and serious, is likely to have have errors in it.

On the other hand, if one does not make a few errors, then one is not likely trying to say something substantive.

Understand however, that I come out of the field of Wmin/pollution prevention - I recycled junk.

"First there is the economic assumption the people are rational actors."

Utility is useful, but pinning it on rationality is not necessary - any more than the theory of gravity requires planets to love each other. Utility is just a framework for thinking about how people react to cost changes: internally tautologous, like any self-consistent theory.

MT, it'd be great to do some solid work on this (the whole sceptical economist thing) at some point in the near future.

"... without growth there are only three ways out. The first is to increase public borrowing to compensate for the collapse of private borrowing. Private spending is bound to be depressed as individuals and companies lower their borrowing – so for a time exports (as long as other countries are buying) and growing public debts are the only reliable avenue to promote economic growth. But now there is a veto on growing public debt – due to the Tea Party movement in the US, the collapse in confidence in the euro and Britain's conservative government – and export demand from Asia is slowing. The lessons from history are clear. Without publicly or privately generated growth there are only two other ways forward to pay down private debt after credit crunches: default or inflation, either containably managed or dangerously unmanaged."

MT, as much as I appreciate your sentiment, as someone who is well aware of his limitations when it comes to any science, I have to say one thing: economic science and climate science are two entirely different things. The latter is trying to make sense of physics in reality, (most of) the former is denying the existence of physics, or reality for that matter.

In fact, I would encourage a denialist-like movement that doggedly hounds dominant economic thought that is shaping so much of our livelihood, culture and environment.

The movement is already there, of course, but it lacks the dishonesty and financial think tank backing that constitutes the climate denial movement. And the fact that almost everyone prefers believing in fairy tales (and yes, that goes for most of the environmental movement as well).

We'll have to wait until the crisis cocktail gets served and try to prepare as well as we can for what comes after that. Some more people will be willing to listen and think by then.

We may believe that climate science is sound and economics is not, and we may believe we have strong reasons for this.

But others believe exactly the opposite. There is a symmetry in the social aspect even though we expect there is not a symmetry in the intellectual basis.

The only way to handle this is to bend over backwards to be openminded. Of course, perceptions may differ. For example, Judith Curry is now flogging as a potential breakthrough an idea that violates mass conservation. It is hard for us to take it seriously enough to bother to refute it, but people without a scientific education (and apparently a few who have one) nevertheless do.

Both of you know how much resistance there has been in getting things done re the climate.

I would suggest that getting something done about the problem that you presented is more than one order of magnitude harder. So, how would you propose going about getting something done here?

Neven talks about getting it into economics faculties. How, exactly? And how long after getting it into economics faculties should we expect it to start to end up in the policy arguments in government? 30 years? 50?

Evilreductionist: first of all, I don't think there is anything that can be done to avoid what will come. But that doesn't mean there is no sense in trying or speculating/theorizing.

Second, I wouldn't say things need to get done. That's the second step. First there has to be a realization that the crisis cocktail is real. This needs to be followed by a collective debate on solutions. And then things get done, or not. Suggesting solutions now, when most people are in denial about almost every crisis, just breeds opposition and more denial.

As I made clear in my guest blog here I truly believe that nearly every aspect of our current predicament can be traced back to the fallacious economic concept of infinite growth.

So, I would suggest that everyone who is engaging himself to improve one of those aspects (whether it be nature conservation, diabesitas prevention, global warming mitigation) calls attention to the fact that none of these aspects will be conclusively solved if the current dominant economic concept isn't ditched for something more realistic.

That would be a first step to get into the collective consciousness that this is at the core of the crisis cocktail (of course there's more, but this is graspable for most people: nothing can grow forever). Every global problem can and must be traced to this. Because we need a holistic solution, not separate solutions to every fragment.

As it gets more in the collective consciousness, which is already happening I believe, it will probably also get into the ivory tower of economics (I think, not too sure, as everyone there is so busy sucking the elite's ****). If it gets there, it gets turned into policy five minutes later.

The only way to handle this is to bend over backwards to be openminded.

I agree that is the best way, but I'm not up to it (yet). My temper gets the best of me when I see blatant denialist behaviour, or worse, the hypocritical behaviour of some of the other elements in the movement.

It costs too much time and energy, and in the end I only make things worse by fueling the negativity. I also think I keep going back to it out of frustration at my own ineptitude to properly walk the walk. Perhaps I keep looking for that righteous indignation, so I can go and blame someone else for everything that is going wrong. A pretext to stay in my little safe zone.

So now I'm trying to ignore the denier PR effort as much as I can and try to do more positive things like running the Arctic Sea Ice blog.

I'm tired of debating with people who think the only problem there is, is the government trying to take way our freedoms. Let the crisis make the argument that nothing can grow forever.

I have to disagree that Samuelson is a good introduction to economics - he was the guy who tried hardest to make it a hard science, so that comples social interactions can be modelled with a few formulae.

I suggest the writings of John Kay - in particular a book called The Truth about Markets - probably called something different in the US because we know that the US knows everything about markets. It works as a good primer of the full range ofeconomic thought and shows a lot of the weaknesses thereof. His website johnkay.com might also be interesting for you. His thoughts seem to converge with yours on a lot of levels. And he is a reputable economist.

I guess one could make the point that there are many equally legitimate economic theories but only one legitimate climate theory.

Of course this begs the question - is it because the latter is a mature theory, or because there is a dogmatic insistence on conformity within the field?

We know the answer, but how do we demonstrate it. A priori, to some points of view, the hypotheses may carry equal weight, or even be weighted against us because of our inevitable perceived association with "greens" and some environmentalist superstitions.

maninabarrel --- The edition I studied from in 1952 had no formulas whatsoever, just graphs demonstrating elasticity. While not in that edition, later editions include separate chapters on the Austrian school and marxist economics.

My point in mentioning the book is (1) I studied from it and (2) it clearly wasn't intended to cover everything, such as the irrational movements of markets in bubbles and pops.

Nonetheless, other later books might now be superior. For example, discussing the economic behaviour of states (countries) which issue fiat currency that everybody has to use since the government has the monopoly on printing money.

Michael Tobis --- There can only be many economic "theories" in play if they are all illegitimate, that is, fail to adequately describe actual behavior as known from historical records..

That is roughly why history is not considered to be a science. For example nobody actually knows why the western Roman empire fell apart, although many historians have written whole books about the collapse.

Similarly I'm sure that economists will write many books, from different perspectives, on the real estate mortgage driven recession we don't seem able to move out of. Notice the similarity to the long aftermath of Japan's real estate boom and bust? I don't think anybody knows why although I'm sure there are books on that as well.

Aaron --- Climatology is certainly a science. One aspect, but only one, is making so-called models of the climate system. These work moderately well over rather long intervals to mimic actual paleoclimate data, such as the transition from LGM to the Holocene. However, it is completely unreasonable to expect biannual predictions of a delicate feature such as Arctic ice extent. It is reasonable to use climate models to estimate global temperature on a bidecadal scale.

Thanks for the response. The problem with just throwing it out there is that intelligent people then ask, 'What's the alternative?'

By that, they mean, 'What does a zero growth world look like?'

If you do not have somewhere to head for, there is no means by which to take any step to get there.

My prediction would be that if there were an economic/social/environmental collapse that what would arise from it (assuming humans survived) would be ... a repeat of the infinite growth society that preceeded it. This seems to be the pattern in the rise and fall and rise and fall and rise and fall of the various empires throughout history.

This has all happened before; it will all happen again ...... unless we can, prior to the collapse, somehow spell out what kind of society we should be aiming for. And I think that we would need to get into specifics.

Note: I am still not sure that I buy the notion that the endless growth model is fundamentally flawed, because it depends on precisely what is growing.

If the universe is infinite and if human intellect is infinite (or can be infinitely extended) then there are no limits to growth in a universal sense (until the heat death of the universe, but that will finish a non-growth society just as surely as an infinite growth society).

However, even if I do not completely buy this, there are definite and obvious problems with such a model when the physical limits of the system are being run up against.

The problem with just throwing it out there is that intelligent people then ask, 'What's the alternative?'

By that, they mean, 'What does a zero growth world look like?'

The main point, I believe, is that these intelligent people by this time have realized that we are starting to see what an exponential growth world is starting to look like, and that it's not an option any longer.

Of course, many solutions are already being discussed, and I have my own ideas about this, but my question to those intelligent people would be: 'What do you think a zero growth world w/c/should look like?'

In this sense there is an analogy with the climate debate. Instead of denying the (looming) crisis, I would like to hear from right-wing conservatives and even the free market fundamentalists what solutions they propose. Because I think they'd have some sensible, pragmatic things to say about that.

I am still not sure that I buy the notion that the endless growth model is fundamentally flawed, because it depends on precisely what is growing.

Indeed, what precisely is growing? Who decides this? Can we change the definition? Can we measure GDP in some different way that would reduce the need for ever greater quantities of energy and resources (that aren't there or very expensive)?

And that of course would mean we'd have to look at what we need, rather than at we want. On a collective and an individual level. This would entail the conscious imposing of limits.

Of course, everything's very complicated, but the theory that we can't continue as we are, is dead simple. Right now it's about getting people to realize there is a crisis cocktail and it's mainly because we have turned the economic theory of infinite growth into dogma, not to be questioned.

Only when enough intelligent people truly realize this, can we start discussing what a zero growth world looks like. Unfortunately intelligent people are just as brainwashed as the unintelligent ones by our consumer culture.

But I'll let the crisis do the talking (because it can't be shut up) just repeat to everyone I know what the cause is: the economic concept of infinite growth. Some people are actually starting to see the connection (and more importantly, what their role as individuals in that is), so maybe there's hope.

MT, I'm glad you've called out the problem of economic denialism, because the flavor of many of the comments feels a lot like the summary contempt that earth and evironmental sciences routinely suffer. I don't have any formal background in the field, but I've taken an interest in it for many of the same reason as you. I recognize (as do some economists, eg Krugman) that the field and its findings get bent towards the perogatives of ideology and financial power, especially through the filter of journalism. It's also true that econ does a poor job of incorporating the constraints of physical sciences (though it doesn't generally do it with the explicit derangement of Julian Simon), but watch the fur fly when you try to discuss biology with sociologists or anthropologists. I don't mean to justify any of that, but to point out that much like our field, there is much more depth and subtlety that can be addressed with a perfunctory "these guys don't know what they're talking about". And I think it needs to be impressed on physical scientists not to get too smug because they picked something relatively easy to study.

I don't mean to justify any of that, but to point out that much like our field, there is much more depth and subtlety that can be addressed with a perfunctory "these guys don't know what they're talking about".

I think it wouldn't be an exaggeration to say that 90% of economists haven't got the faintest clue what they are talking about. That's because 90% of all people who go and study economics, do it because they are interested in making good money, not because they are interested in how the world works or what's best for them and their fellow human beings.

And I'm being mild here.

Of the 10% that does know what they are talking about, 90% are free market sociopaths that make the most money of all economists.

So there's 1% of alle economists left. That's the Herman Dalys and Bob Costanzas of this world.

I have the greatest respect for the expertise and humaneness of that 1%.

Alexander Ac mentioned that the documentary Growthbusters - Hooked on Growth is soon to be released. I'm just reading a short article by its director and he says something that fits in well on this thread:

A story about ice melting would include comments from both real climate scientists and climate change deniers. But for this GDP story there was no discussion in the newsrooms about getting the other side — a quote about how terrific it is that gross domestic product may be settling toward a steady state. They assume GDP growth is good news and economic contraction is bad news — for everyone. It doesn’t even occur to them to question that assumption. Blind faith in the old worldview still has a tight grip on the reporters and editors. This needs to change.

My apologies, I was mistakenly referring to Samuelson's thesis "Foundations of Economic Analysis". However, I still think that Kay gives a more rounded, maybe sceptical, account of the limits of certain types of economic theory than Samuelson does.

Does climate science estimate how much CH4 will be released by melting permafrost over the next 60 years and how much warming will result from that CH4 release by 2100? Is the warming resulting from human and permafrost emissions enough to trigger clathrate decomposition within 60 years? What is the expected total warming within the next 90 years? What are the dynamics of ice sheets as moulins allow heat to be advected into the core of the ice until the structural strength of the ice at the base of the sheet is less than the load on the ice at the base of the ice sheet? How long does it take a ice sheet sitting in a thousand meters of 2C salt water to melt?

Allowing for A1B1 human emissions, permafrost melt, clathrate decomposition, ice sheet dynamics, and density driven local ocean circulation, what will the sea level be in 2100? 2150? These are not new questions. If the community wanted answers to these questions, we would have a good approximation – now! The conclusion is; that we do not want answers to these questions. That is, we do not want to do rational risk management. This is a societal belief.

The question on sea ice volume is symbolic of a systematic failure of climate science. Look at summer ice extent ( http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/seasonal.extent.1900-2010.png ), and tell me when the decline of summer sea ice began, and note that at about that time, measures of Arctic sea ice in other seasons all go “out of control”. With a Mark 1 Eyeball, it is clear that the summer Arctic sea ice decline began prior to 1955. At one time, I thought this was a data quality issue. Now, I see it as a social beliefs issue where climate scientists (and their social networks) cope with the psychological trauma of AGW by putting it in the future, away from the here and now.

Members of those social belief networks produced GCM models that missed the onset of Arctic Sea Ice melt that had started – sooner than expected. The loss of sea area triggers albedo feed back, water vapor feed back, changes in NH atmospheric and ocean circulation. These change influence clathrate decomposition, and permafrost melt that releases large amounts of carbon (as CH4 !) into the atmosphere. Thus, the models understate the climate of 2100 by at least: the heat that triggered the (circa 2007) Arctic Sea Ice melt plus 50 years years of feedbacks. Therefore, the models consistently understate effects and impacts of AGW.

We are 4 years past AR4, and our climate is 10 years ahead of the AR4 warming forecast (20 years if you include sea ice/permafrost melt/Texas Drought/rain on the snow fields above the big Asian glaciers). As more and more feedbacks kick in, the models are going to be farther and farther from the reality of AGW as amplified by carbon feedbacks.

At this time, climate science is not enough of a science to support risk management decisions. Climate change is out pacing climate science. For climate science to out pace climate change will require a change of culture. We will need climate scientists with "The Right Stuff" to ask and answer the hard questions. Then, we will need an adoring public to remind everyone that it is a glorious thing to have The Right Stuff. We are not there.

An excellent article about the UK riots going on at the mo. I was thinking about this in relation to the work-related stuff being discussed here. If you're talking about some alternative future where paid employment isn't the measure of wealth or the source of one's identity, what sort of a world might replace it? What is going to give people a stake in society?

The problem: all the successful social-capital, civic engagement-building institutions (to use Putnam's language) are well-developed and embedded: the workplace, family, community organisations much less so. They take time to build and - as the Tories over here are finding out - turning off the money faucet while berating people for not taking part for free in their 'Big Society' - is not looking like a recipe for success. (Not to mention paid work is still the biggest predictor of happiness.)

What a coincidence, I was just reading this excellent piece. Even riots are now fueled by the pathological craving for consumption.

"If you look at Baudrillard and other people writing in sociology about consumption, it's a falsification of social life. Adverts promote a fantasy land. Consumerism relies upon people feeling disconnected from the world."

You know what I'd like to see? A statement of consensus from economists about exactly what they do agree upon - particularly from a macroeconomic perspective. Seems to me that a field that is still bitterly divided on the subject of - for example - something as seemingly fundamental as the causes of (and remedies for) inflation is next to useless in practice.

Stephen: though it's a social science, in some respects economics can be seen as a test-case for what happens to a discipline that becomes built into the nervous system of political power structures. It becomes next to impossible to disentangle the findings from the filter of interests the discipline has to pass through. Crucially, that doesn't mean that all economic theories are equal, or that pursuing some idea of economic reality is not worthwhile.

But compare to climate science, since it started really impacting on power structures. Physical reality obviously provides a far more robust foundation to the science than economics has - as Gaz said at Tamino's last year:

"How would you physicists like it if you had to survey a bunch of molecules to find out what they planned to do, only to have most of them change their minds anyway, and the government restructure the laws of physics because of some opinion poll?"

But climate science could still become warped beyond recognition in a future where deniers hold positions of power. Teasing out economic truth among all the political hobby-horses of the world (and one's own preconceptions, which can stand undefeated much easier than physical science findings) is a monumentally hard task, but worth trying.

Some may want a weaker economy on purpose, some are too blinded by ideology to consider objective information, some aren’t terribly bright, and some, as David Brooks recently noted, simply “do not accept the legitimacy of scholars and intellectual authorities.”

But the bottom line remains the same: nearly everyone who understands economic policy at any level is convinced Republicans — in Congress and on the presidential campaign trail — are spewing gibberish. And in this case, “nearly everyone” includes veterans of the Reagan and Bush administrations, making opposition to right-wing Tea Party nonsense bipartisan.

Also note the scope of the concerns. Current GOP officials aren’t just wrong about stimulus, the timing of budget cuts, taxes, debt reduction, or monetary policy — they’re wrong about all of them at the same time.

In fairness, the article does note one economist — Stanford’s John Taylor — who’s willing to defend the Republican line (as he always does, regardless of merit). But to appreciate the credibility of the GOP’s go-to economist, swing by Krugman’s blog and type Taylor’s name into the search engine....